This story was produced by CalMatters, a nonprofit news organization focused on California public policy issues, in partnership with Southern California Public Radio. You can find more in our series here.
Large industrial facilities in California have a few choices about how they comply with the state’s cap and trade program.
Businesses can emit less pollution, buy allowances to pollute, or they can pay for other projects – called offsets - to reduce emissions rather than the polluters. Offset projects are located all over the U.S, but that’s not why they’ve come under fire.
In the green pastures that surround the small towns of Central Pennsylvania, a pig farm is paid to eliminate thousands of metric tonnes of greenhouse gas instead of California polluters.
Ideal Family Farms raises about 30,000 hogs a year, which turn into the bacon and ham hocks that is sold in grocery stores.
“All they have to do is eat and drink and not worry about staying away from predators,” says Dennis Brubaker, one of the owners of the farm in Beavertown, Pennsylvania.
The pigs produce a lot of manure, and manure emits methane, one of the heat-trapping gasses under California’s cap.
Brubaker uses the methane as a source of renewable energy. Every year, seven million gallons of manure are piped into a 16-foot deep concrete cauldron in the ground. The methane is collected and fed to a giant engine, where it combusts to generate electricity.
The process removes about three thousand metric tons of methane a year. And that reduction is available for purchase as a carbon-offset under California’s cap and trade program. Preventing the emission of one metric ton of greenhouse gas is worth roughly $10.
“Because of the manure that we had, and the need for energy, it was just the perfect fit,” says Brubaker.
Large industrial facilities in California are given a threshold for how much greenhouse gases they can produce for free. Above that benchmark, they must buy an allowance to pollute, or they can purchase an offset from a project such as Brubaker’s.
“It’s pretty cool that we can have joint partnerships in trying to help make the environment better from one end of the country to the next,” says Brubaker.
About 80 percent of the offset credits in California’s marketplace come from out of state projects. That includes things like conserving forests or incinerating greenhouse gases.
“Offsets are less expensive, yet real emissions reductions,” says Gary Gero, President of the Climate Action Reserve, a registry for offsets.
About 20 million of these credits have been approved by the state for purchase since the start of the cap and trade program.
Gero says offsets give businesses flexibility in reducing emissions.
“What we’re trying to do with a mechanism like cap and trade is reduce the overall impact on the economy, essentially on businesses and their consumers of complying with the environmental regulation,” he says.
There is a limit to how many offsets companies can use, but critics worry that offsets are a crutch - allowing polluters to keep polluting as usual.
“They shouldn’t be tied to our effort to get away from fossil fuels,” says Laurie Williams, a volunteer with the Citizens' Climate Lobby, a group that sued the state over offsets, and lost.
“The activities that have been chosen for offsets are virtually all activities that were happening to some degree prior. And where it’s impossible to tell what additional increment of that activity you’re getting because of the offset credit. It’s too complex,” she says.
Back in Pennsylvania, Brubaker says he was counting on revenue from a market like California’s before he installed his methane digester. But if the program didn’t exist, he still would have moved forward without the project.
“What it comes down to is, it certainly helps project like ours come together,” he says.
The supply of offset credits has doubled since last year, according the Climate Action Reserve. California businesses will disclose more information about how many offsets they’re using this November, when they submit cap and trade compliance information to state regulators.